Pennsylvania Life & Health Insurance Guaranty Ass'n v. Insurance Department

625 A.2d 1286, 155 Pa. Commw. 597, 1993 Pa. Commw. LEXIS 311
CourtCommonwealth Court of Pennsylvania
DecidedMay 19, 1993
DocketNo. 982 C.D. 1992
StatusPublished
Cited by2 cases

This text of 625 A.2d 1286 (Pennsylvania Life & Health Insurance Guaranty Ass'n v. Insurance Department) is published on Counsel Stack Legal Research, covering Commonwealth Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pennsylvania Life & Health Insurance Guaranty Ass'n v. Insurance Department, 625 A.2d 1286, 155 Pa. Commw. 597, 1993 Pa. Commw. LEXIS 311 (Pa. Ct. App. 1993).

Opinion

CRAIG, President Judge.

In this appeal from an order of the Insurance Commissioner, the Pennsylvania Life and Health Insurance Guaranty Association (Association) argues that the commissioner exceeded his authority granted by the Life and Health Insurance Guaranty Association Act (Act),1 by requiring the Association to begin to make payments to Pennsylvania policyholders and annuitants of the insolvent Executive Life Insurance Company (Executive Life). Because the commissioner com[600]*600mitted no error of law in issuing the order in question, we affirm.

Only a brief statement of the facts in this complex case, as stated in the February 18,1992 opinion of the commissioner, is necessary for the resolution of the narrow question before us. In April 1991, pursuant to an order by the California Superior Court, the California Insurance Commissioner was appointed the conservator of Executive Life. Under the California commissioner’s conservatorship, the court authorized Executive Life to pay only 70% of its periodic payments under various annuity policies, beginning on May 1, 1991. At that time, affected employers across the country, including the Pennsylvania employers involved in this case, filed complaints on behalf of their employees who suffered a 30% reduction in their annuity payments from Executive Life.

In the course of his supervision, the conservator solicited and reviewed bids from various entities interested in buying Executive Life. In December 1991 the court found Executive Life to be insolvent, appointed the California commissioner as rehabilitator, and began liquidation proceedings. Thereafter, the court approved a bid from the company that became known as Aurora National Life Insurance Company (Aurora), and began the process of approving the rehabilitation plan, which included a purchase and sale agreement with Aurora, and an enhancement agreement involving the National Organization of Life and Health Insurance Guaranty Associations, of which the Association is a member.

As summarized by the California commissioner in his motion for a final rehabilitation plan, the enhancement agreement provides for participating guaranty associations to fulfill their statutory obligations through the enhancement agreement entered into with the conservator and Aurora. The enhancement agreement would provide, through a variety of mechanisms, additional benefits to eligible policyholders and contract holders whose benefits were reduced by 30% when Executive Life went into conservatorship.

[601]*601The enhancement agreement makes an effort to resolve various substantial issues relating to guaranty fund coverage on a national basis rather than addressing each state’s guaranty association individually. In addition, the enhancement agreement would “enhance” the benefits available to covered policyholders by attempting to fill in the 30% gap created by Executive Life’s insolvency.

In the Pennsylvania portion of the case, our commissioner first determined that the Association’s obligation to make payments under the Act was triggered by the December 1991 California court order declaring Executive Life to be insolvent. After numerous briefings and conferences, the commissioner issued the following order on February 18, 1992:

1. Based on the Order of Liquidation that will become final on or about February 19,1992, the Fund [the Association] is statutorily obligated to make payments under the Pennsylvania Life and Health Insurance Guaranty Association Act [the Act] to Executive Life policyholders and annuitants.
2. The Fund [the Association] shall immediately begin preparations for payment to those annuitants whose benefits were cut 30 percent by Court Order and shall begin payments no later than 90 days from the date of this Order.
3. No further administrative proceedings at this docket are necessary and this constitutes the Final Order in this matter.

On February 25, 1992, pursuant to 1 Pa.Code § 35.241,2 the Association applied for reconsideration and clarification of the commissioner’s order. The Association requested that the commissioner clarify that the Association was obligated to pay Pennsylvania residents only, up to the statutory limit specified in the Act.3 The Association also asked the commissioner to amend the order so that it would not be required to make [602]*602payments directly to annuitants and policyholders, but could guarantee or assure that payments were made, pursuant to § 7(c) of the Act, 40 P.S. § 1807(c). The Association further objected to the commissioner’s time frame for beginning payments to Pennsylvania policyholders, on the ground that the imposition of the ninety-day deadline exceeded her authority.

The commissioner granted reconsideration on March 6, 1992, and issued an amended order on April 8, 1992. The amended order stated:

1. Paragraph 1 of the February 18,1992 Order is amended to read as follows:
Based on the Order of Liquidation that will become final on or about February 19, 1992, the Pennsylvania Life and Health Insurance Guaranty Association is statutorily obligated to make payments pursuant to the provisions of the Pennsylvania Life and Health Insurance Guaranty Association Act, 40 P.S. §§ 1801-1824, to Pennsylvania policyholders and annuitants of Executive Life Insurance Company.
2. The proposed revision to the February 18, 1992 Order that would eliminate the Association’s obligation to pay those Executive Life Insurance Company policyholders and annuitants whose benefits were cut 30 percent by Court Order within 90 days (i.e. by May 18, 1992) is DENIED. The 90 day time frame to begin payments is reasonable and a proper exercise of the Commissioner’s authority under the Act.

Only then did the Association petition this court to review the commissioner’s order. In response to the Insurance Department’s motion, this court dismissed the Association’s appeal of the February 18, 1992 order, limited the appeal to the April 8, 1992 order, and ruled that this court would consider only those matters before the commissioner when he issued the amended order.4

Before we address the Association’s argument that the commissioner exceeded his statutory authority by ordering the [603]*603Association to fill in the 30% gap for Pennsylvania policyholders and annuitants in a particular manner and within a specific time period, we must explain our proper scope of review.

The department argues that the Association is improperly attempting to appeal the commissioner’s February 18, 1992 order on an untimely basis through its appeal of the April 8, 1992 order, but we disagree. Pursuant to Pa.R.A.P. 1701(b)(3)(ii) and Schoff v. Richter, 386 Pa.Superior Ct. 289, 292, 562 A.2d 912, 913 (1989), when, as the department did here, an agency expressly grants reconsideration of an order within the time prescribed for filing an appeal from that order, “the time for filing a notice of appeal or petition for review begins to run anew after the entry of the decision on reconsideration, whether or not that decision amounts to a reaffirmation of the prior determination.... ”

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Bluebook (online)
625 A.2d 1286, 155 Pa. Commw. 597, 1993 Pa. Commw. LEXIS 311, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pennsylvania-life-health-insurance-guaranty-assn-v-insurance-department-pacommwct-1993.